Will Outsourcing Continue to Grow in the Years to Come?

Outsourcing, which started in the early '90s as a revolutionary phenomenon of sending unskilled work from developed countries to developing countries, has experienced tremendous growth over the past ten years. Now, after more than a decade of outsourcing, the success of outsourcing is being questioned. Will the advantages of outsourcing become overshadowed by governmental pressures and rising offshore outsourcing costs? Will outsourcing continue to grow or be curtailed by force in the years to come?

Industry experts, who have been studying the disadvantages and advantages of outsourcing, feel that the future of outsourcing will continue to remain secure mainly due to the various benefits that outsourcing brings both to the buyer and the offshore provider. The benefits of outsourcing are manifold- the most important being cost-effectiveness and better infrastructure, and this has lead to its sustained growth.

Careful assessment of the various offshore outsourcing trends have reveled that outsourcing to India and other countries will continue to grow due to the following reasons.

Cost savings will continue to be a major advantage of outsourcing

One of the major benefits of outsourcing in the early years was the vast difference in cost. Companies were able to reduce their overall expenditure considerably by paying less than half the usual amount in salaries to their offshore outsourcing partners.

In the late 90's many outsourcing experts predicted that cost savings would no longer be one of the main advantages of outsourcing due to the rising cost of living and technological advances. But the financial woes brought on by the 2008-2009 economic crisis has made the whole concept of cost saving even more important. With the economic recovery still unsure cost saving remains one of the major reasons for outsourcing to India.

Outsourcing will focus more on core business activities

Latest trends in outsourcing point to the major change of focus from the outsourcing of non-core services to the outsourcing of core business functions. Most businesses, with a significant number of SMEs, consider fully outsourcing their IT department, not only to save money, but especially to gain better experienced and skilled specialists to produce high quality solutions.

Outsourcing to India, especially IT outsourcing, is on the rise due to the abundance of qualified professionals who have the skills, resources, and methodologies it takes to create superior results.

Standardized outsourcing solutions will be favored over customization

Another trend that will affect the future of outsourcing is the move towards standardization of outsourcing solutions. The economic crisis of the recent years has led to companies favoring standardized outsourcing solutions over custom made solutions which are more expensive. Companies prefer to use their dollars saved to acquire new customers and to think out new business concepts.

This has led to organizations outsourcing to India and other countries more willing to move to a standardized way of working for non strategic processes. With the huge pressure to keep costs down, service providers will also rely more heavily on mass automation tools that will create additional opportunities and reduce the staff necessary to support critical business applications.

Outsourcing of smaller projects will continue to be an important benefit of outsourcing

The future of outsourcing will witness an increase in the outsourcing of smaller projects. Although big corporate houses will continue to outsource huge projects to major service providers, there will be an increase in smaller buyers who will be looking for flexible and specialized smaller providers to support them in realizing new business concepts. This benefit of outsourcing will be even more applicable to entrepreneurs and individuals who spent years watching from the sidelines and who now want to benefit from a piece of the outsourcing action.

Outsourcing of smaller projects will help companies, especially those looking towards outsourcing as a way to resurrect their businesses as the economy rebounds. Outsourcing to India will also continue to rise due to a surge in smaller IT service deals from first-time buyers.

Outsourcing and cloud sourcing will merge and grow exponentially

Industry experts who have been observing the benefits of outsourcing and cloud sourcing predict that cloud sourcing will soon merge with the existing outsourcing market and provide better opportunities for the entire outsourcing industry. With businesses in general pushing towards cloud solutions for different reasons like flexibility, scalability and cost savings, outsourced IT services will be required for migration of existing infrastructure and services to make them cloud enabled.

This major advantage of outsourcing will benefit infrastructures supported by cloud resources and other smaller outsourcing providers.

On the whole outsourcing is expected to increase dramatically in the years to come. This is because globalization which inextricably links the world's economies leaves no room for individualism. Companies will not be able to meet the various challenges they face relying solely on their own internal resources but will have to look beyond for more cost-competitive and capable sources. This is where outsourcing and the many advantages it brings with it plays an extremely important role.